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tv   Nightly Business Report  PBS  May 23, 2012 6:30pm-7:00pm EDT

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>> this is n.b.r. >> tom: good evening, i'm tom hudson, susie is off tonight. hewlett-packard sends 27,000 workers packing as it looks to focus on cloud computing. worries about greece's troubles spread throughout europe sends wall street on a wild ride. and another sign of spring for the housing market: new homes sales, and prices move up. that and more tonight on "n.b.r." >> tom: wall street spent the day deep in a sell-off as investors focused on the threat of greece pulling out of the euro-zone. but the mood changed in the last hour of trading, as buyers swooped in, sending the blue chip dow industrials briefly
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into positive territory. we'll get the latest out of europe in just a bit. but first the comeback in stocks: the dow cut a 200-point loss to just a six-point closing drop, the nasdaq gained 11 points and the s&p rose two. hewlett packard added to the late day optimism for investors, reporting a stronger than expected quarter. it earned 98 cents a share in the second quarter, better than estimates, and better than the company's own guidance. the stock was up nearly 12% in after-hours trading, as it confirms plans to cut thousands of jobs. erika miller reports. >> reporter: the earnings at hewlett-packard were better than many on wall street expected, but profits are still down over 20% from last year. the company's consumer products are struggling to compete against apple's. it's not just about the device itself, it's about the ecosystem around it. and apple has such an effective ecosystem, whereby if you buy one device you can connect and have interrelated features and
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functionality. >> reporter: but h.p.'s earnings news was overshadowed by an expected massive layoff announcement. 27,000 employees will be cut within the next two years. that's about 8% of its workforce, as the company combines two business units. often stocks surge on restructurings, but h.p. shares are now trading at levels not seen since last september. investors are concerned that h.p. has been restructuring for the past decade and axing low has done little to boost profits. erika miller, "n.b.r.," new york. >> tom: still ahead, we continue our look at veterans and jobs, with one program in the mid-west training service members for civilian jobs, before they leave the military. "nightly business report" is brought to you by:
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captioning sponsored by wpbt in formal summit in brussels. leaders of france anitaly voiced support for using european wide bonds to help the the news raised hopes for a concrete plan to keep the eurozone from falling into a severe recession. but, as suzanne pratt reports, investors have good reason to be skeptical. >> reporter: if you want to know what's happening with europe's financial crisis, look no further than u.s. markets. treasuries rallied again today, as the flight to quality trade is still popular. major u.s. stock averages initially tumbled, as talk about greece's potential exit from the eurozone heated up. and, stocks recovered when headlines from today's summit soothed investors.
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still, veteran trader art cashin calls greece the burning ember than could ignite a global inferno. >> greece is about the 39th largest economy, not to be dismissive of it, but if things go badly there and it looks like they're leaving, it could lead to bank runs in spain, which is the 12th largest economy in the world. >> reporter: in the last few weeks, the dow has fallen 5%. that's since elections in france and greece raised new doubts about europe's fragile economy and dimmed hopes for an easy solution for its debt crisis. greece leaving has become more than just a worst-case scenario. today as european leaders gathered in brussels for another summit, there were reports of contingency planning for a possible departure of the debt laden country from the euro. one strategist puts the probability of a greek exit at 40%. >> i think it's most likely that greece continues to stay in the euro zone, but the probability
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is fluid and could increase in the coming days and weeks. >> reporter: if greece chooses to go it alone, its departure won't be an orderly event. over a weekend, banks will most likely convert euros to drachmas, opening for business with a new currency on a monday. >> this is the kind of situation that's happening in a short period of time that almost by necessity, by surprise is going to produce a little bit of a shock. and, that's going to be a negative for markets at least in the short-term, while everyone assesses the overall consequences. >> reporter: greece will take another stab at electing a new government on june 17th. between now and then, you guessed it, u.s. stocks are likely to remain extremely volatile. suzanne pratt, "n.b.r.," new york. >> tom: scott macdonald is with us tonight from the nasdaq. scott, the news flow out of greece seems to pick up with no stability here. we had the g-8 over the weekend
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then eu in formal meeting last night. has the situation now tipped toward a path of default and failure ultimately? >> i think there's a very good chance greece does leave the euro. we look at it probably about 60%. i think the issues that face greece, one is you've got an insurmountable debt burden and depression for four years and unemployment at 25% and elections which you're exercising democracy in greece but the anti-bail out party's been strong. if you take all those things together it doesn't bode well for what's coming down the turnpike in greece. >> tom: the idea that seems to get traction with the leaders of france and italy these euro-wide bonds trying to barrow the good credit of germany for instance to lower the barrowing cost and here the yields on three government pond bonds. greece is barrowing cost for the
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next decade 30%. is this a solution a euro-wide bond? >> i think it would ultimately make good sense but the problem is a don't think the germans want to dilute their credit worthiness for the rest of europe and ultimately it's the germans on the hook if other people can't pay up to meet the obligations for the euro bonds. that's a major hurdle in this process. >> tom: if you've got a neighbor over leverage would you want to use their credit score to buy another home. >> basically. >> tom: a year go no one wanted to talk about the possibility of greece dropping the euro and it's being debated publicly in europe and the dollar has been strengthening. is this the story a stronger dollar, weaker euro? >> going forward absolutely. there's no quick resolution to
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europe's problems. plus the you that's going to come up for europe is the achilles heel is the banks. i think it's a combination of british banks, french and german have lent about $1.2 trillion according to the bank of international settlements to coutries and raises questions to the financial strength of northern europe or the regions going together and reflects back to where the currency's going to go if you're a deep recession and have a recession in southern europe it will impact and slow german growth and if greece leaves it's gonna have a bigger impact and bigger drag on growth in europe and will filter into germany as well and ultimately the euro is $1.27 today to the dollar will go down. >> tom: maybe perhaps back to parody back to even? >> i don't know if we go back to
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parody but the trend is in that direction. >> tom: scott macdonald with mcs management. >> tom: more signs the housing recovery is re-building. more new homes were sold last month, compared to march. sales rose 3.3% in april, to 343,000 units. prices for new homes are up too. the median price, of $235,000 is up almost 5% from a year ago. the sales gains have helped home builders. their stocks are up roughly 30% this year. some analysts think they're
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still worth buying, as the slow and steady housing recovery continues. >> house recovery right any. so what we would do is take the weakness that has nothing do with actual housing so today we're seeing a lot of weakness on europe and add slowly to your position. >> tom: mcgrath has buy >> tom: mcgrath has buy ratings on pulte homes, ryland homes and toll brothers. toll posted a 25% jump in quarterly profits today. it reversed a year ago loss, to earn ten cents a share during its fiscal second quarter, more than a nickel above estimates. toll shares jumped more than 2.5%, closing at a five-year high. >> tom: and the congressional budget office warns it can fail if it avoids the cliff with the combination of tax increases and government spending cuts due to take effect in january.
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if congress and the white house fail to come to an agreement before they predict the economy will fall into recession next year. the budget office under president bush and the former economist. is this about money or politics? is this a canary in the coal mine for the fiscal health of the u.s. ? >> it's a real economic threat. there's no question of spending cuts and sharp tax increases that would happen in the end of december would pose a threat to the u.s. economy and it's extraordinary they said so so clearly i can't remember them forecasting a recession so the real question is whether this wake-up call will yield action and action quickly because i quite frankly think the threat hits sooner than january and start seeing the ramifications as the year progresss >> tom: if a directer would use the word recession in a record
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do you think the congress and white house sit up and listen? >> i think they sit up and listen. i fully agree with doug ands it remarkable to make him make a recollection about how rare this is. we already have an economic recovery not fast enough and that has been a bit wobbly of late and last thing we want to do is impose a shock of gdp in terms of fiscal contraction that's what they said we are looking at and the economic and any reasonable economist will agree it's scary. the politics are far scarier because there's the question of whether you can avoid the cliff dive. >> tom: let's talk about sensible ideas when it comes to tax cuts and what is likely to make it through a lame duck congress likely after the election. will tax cuts be extended for americans making $250,000 or less. is that doable in the climate?
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>> it is in the sense that everybody wants that to happen. that's both democrats, republican, administration all agree the middle-class tax cuts should be extended but the higher end tax cuts democrats want to see expire and that's where we may end up over the cliff. my personal scenario building off this is perhaps january and february it's more of a cliff dive than a bungy jump and retroactively we vi to avoid the damage they predict. >> we agree. we should not go bungy jumping as a country. it's not a good idea. there's going to be increasing nervousness about the automatic spending cuts and increasing disruption on wall street that's prospect of a dividend tax rate going from 15 to 34% comes into view. all that says we should not self-inflict wounds on a
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slow-growing economy. we should continue the policies we have now for the next six months or a year and let the victors in the election sort out the future course. the politics are tough and we won't resolve them now or in a lame duck so let's not pretend we will and buy time to not hurt the economy and let the victors move forward. >> tom: looking for something in early 2013 then. we've had a couple economists that know their way around the white house and we'll lay throw for the time being the debt ceiling debate. thanks, gentlemen. >> thank you. >> thank you.
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>> tom: when a company sells stock to the public, that's supposed to raise cash, not lawsuits. but facebook and the companies that brought it public are deeper in legal trouble tonight. a shareholder class action lawsuit has been filed. and more regulators have jumped into the action. in washington tonight, darren gersh has the latest tally on facebook's troubles. >> reporter: at least two class action lawsuits have now been filed on behalf of shareholders who lost money in the facebook i.p.o. the defendants in the case range from mark zuckerberg on down through the long list of companies that sold facebook shares to once-eager investors. you don't have to be a lawyer to get the substance of this case. mostf it is based on press reports from reuters citing un- named sources who say, lead underwriter, morgan stanley cut facebook earnings estimates, clueing in big investors. but plaintiffs lawyers claim small investors were left holding the bag.
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>> the defendents are going to be harded pressed, after extracting $16 billion from investors for something that is not worth 20% or 25% less. >> reporter: facebook calls the lawsuits without merit and says it will defend the company vigorously. that job will be made harder, securities lawyers say, because the law in this case is considered plaintiff friendly. but facebook and its underwriters can argue they did their best to inform investors and even if they made a mistake, market forces played a larger role in pushing down the value of facebook shares. the bigger concern for the company may come from regualtors. in addition to the securities and exchange commmission's investigation, massachusetts' securities regulator has subpoenaed lead facebook underwriter, morgan stanley. so many people are now suing or investigating facebook, they could probably start their own social legal network. darren gersh, "n.b.r.," washington. >> tom: nasdaq's role in the facebook stock sales also has come under pressure, and now according to reuters the new york stock exchange is courting facebook to move its stock
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listing to the big board. in the "market focus," the late- day rally in stocks pared down the steep losses we saw earlier. the s&p 500 was down almost 1.5% at its worst level of the session, but in the last 90 minutes of the day, the index came roaring back to finish with a small gain. volume picked up a little-- 859 million shares on the big board, just under two billion on the nasdaq. the sector leader was materials, up more than 1%. the industrials and consumer discretionary sectors each gained a little over 0.5%. one giant consumer-focused stock is at its highest price in more than a decade. walmart's has been adding to the gains since its most recent quarterly report showed continued turn-around with its u.s. sales. today's 1.3% gain takes w-m-t to a 12-year high. two online consumer stocks also were moving up.mo travel company expedia gained almost 7%. investment firm piper jaffray
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sees a strong pick-up in web traffic from europe this spring. netflix continues its recent rally, up another 6% today. shares recently hit six month lows. earlier, erika reported on hewlett-packard's latest quarter. dell shareholders suffered a big loss after that company's disappointing quarter and outlook. the company lost almost a fifth of its value, down 17%. volume jumped even fold. this is a year and a half low for dell. in the patent fight between google and oracle, a federal jury ruled google did not infringe orcale's java software patents. oracle claimed google's android mobile phone platform used its software without permission. earlier, the jury found oracle had proven copyright infringement but could not agree if google could fairly use the software. the jury foreman said the final vote that google could fairly use the material 9-3 for google. both google and oracle shares were higher today. the next phase of the case will
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determine what, if any, money google owes oracle. a tech stock to watch tomorrow will be data storage firm net- app. after closing just below $33 tonight, the stock fell to $25 and a change in after hours action. the c.e.o. warned about a slowdown in europe and issued a disappointing revenue outlook. one consequence of the european worries: lower energy prices. u.s. crude oil continued moving lower, falling almost $2 to selling below $90 a barrel. that's its lowest price of the year. our e.t.f. "market flash," four of the most actively traded funds reversed earlier losses to end higher, except the emerging market fund. it lost 0.7%. and that's tonight's "market focus."
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>> tom: with memorial day on the horizon, all this week we're focusing on veterans and hiring. in the past decade more than two million americans have served in the military. when they return to civilian life, some are finding work in the skilled trades. tonight, diane eastabrook introduces us to one unique program that begins training soldiers for jobs as welders before they're even discharged. >> reporter: two years ago, vincent haynes was wielding a wrench instead of a blow torch as a marine mechanic in korea and japan. but, the 24-year-old knew he didn't want to fix machines after he left the military. >> i did a little bit of welding in high school metals class and it's just somethg that i'd really like to get into. >> reporter: it turned out the united association, the union representing plumbers, pipefitters, and welders, was looking for veterans just like him.
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so, now haynes can be found hovering over a drafting table in a classroom. >> what compass direction are we traveling from the center of this 90 to this center 90? >> reporter: getting instruction on a training floor. >> we'll have you clean up this. >> reporter: and working on-site as an apprentice welder. >> when i came in here, right off the bat they were real nice, got me set up right away, had me working in two days. they teach me a lot. >> reporter: the u.a. launched its v.i.p. program, veterans in piping, to meet the growing demand for welders and address the high unemployment rate among vets. >> hello, i'm bill hitte, general president of the united association. i want to personally invite you to become a part of our team. the u.a. recruits and trains soldiers before they're discharged from the military. haynes trained for 16 weeks at camp pendleton, in california before relocating to the chicago area. >> reporter: haynes has one year of training under his belt with u.a. local 597. he's making about $25 an hour.
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when he completes the four-year apprenticeship program his hourly wage will nearly double. paying bills was a big concern for the former marine when his tour was ending, but not anymore. >> we've got a lot of work in this local. there's a lot going on, highly trained professionals and i don't think any company can offer anything else better than this. >> reporter: so far the four- year-old v.i.p. program has trained about 200 veterans. instructor mike galfano says local 597 is desperate for welders because of its aging membership. he says veterans make great recruits. >> we find that they are always on time, actually early when they come to school and do our classes. they are very responsible hard working. >> reporter: haynes took great pride in being a marine. now he finds great pride in being a welder. >> welding it's kind of like an art. it's definitely something you have to work at. >> reporter: diane eastabrook "n.b.r." mokena, illinois. >> tom: our focus on vets and hiring continues tomorrow with a
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look at helping veterans translate their military skills into civilian job descriptions. our "made in america" series heads to silicon valley, where we meet silvertree media, the company behind popular online games like cordy, and sleepy jack. and goldman sachs holds its annual meeting, we'll hear from a major shareholder. in the "money file" tonight, pre-paid cash cards. if you use those re-loadable cards, listen up: some new rules could soon be on the way. the cards look like debit or credit cards, and have become a $150 billion market. they are a popular alternative to checking accounts for low- income americans. but they're not cheap. the cards often carry high fees and charges. the consumer financial protection bureau wants to change that by proposing new federal standards for pre-paid cards. its goal, making it easier for consumers to compare cards, and understand fees. speaking of spending money, if
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you find yourself or someone you know wrestling with a pile of debt, it's time to take action. with tonight's "money file," here's ramit sethi, author of "i will teach you to be rich." >> i recently met a young man in san francisco named chris clark. three years ago, he was in tens of thousands of dollars of debt. yet just last week, he told me he paid it all off, and had just secured a $50,000 raise at a new job. all in this economy. we've all heard how tough this job market is, especially for recent graduates and 20- somethings. yet while i listened to chris tell his story, i noticed how he took two very different approaches. first, he studied his bosses hopes, fears, and dreams. despite the gloom and doom in the news, chris realized he couldn't control macro- economics. but he could control the way he presented himself. he noticed that young people love to talk about themselves, including their interests, what they want, and how they need to be treated. chris flipped this on its head: he regularly sat down with his
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boss to ask how he could make her life easier. then he did it, and along the way, negotiated a 70% raise. next, he used a system to create momentum. it was easy to complain about his salary, his title, and the economy. finally, after years of this, he decided to take control. instead of simply trying harder, he set up a regular system of automatically paying off his debt, contacting people in his field, and taking them out to coffee. within weeks, he was fielding multiple job interviews. now, will we all negotiate a $50,000 raise? of course not. but chris shows us that, even in a dismal economy, we can still control our own futures. i'm ramit sethi. >> tom: see you online at nbr.com and back tomorrow night. "nightly business report" is brought to you by:
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